What is the elasticity for a cross-price inelastic complement good?A.Between 0 and 1B.Between -1 and 0C.Greater than 1D.Less than -1SUBMITarrow_backPREVIOUS

Break Down the Problem

1. Understanding the concept of cross-price elasticity.
2. Identifying what it means for a good to be a complement.
3. Determining the range of elasticity values.

Relevant Concepts

1. Cross-Price Elasticity of Demand: This measures the responsiveness of the quantity demanded of one good when the price of another good changes.
2. Complement Goods: These are goods that are consumed together; thus, an increase in the price of one good will lead to a decrease in the quantity demanded of the other good.
3. The formula for cross-price elasticity is given by: $E_{xy} = \frac{\% \text{ Change in Quantity Demanded of Good } Y}{\% \text{ Change in Price of Good } X}$

Analysis and Detail

1. For complements, the relationship is negative, meaning that as the price of Good X increases, the quantity demanded for Good Y decreases.
2. Thus, the cross-price elasticity for complementary goods is expected to fall between -1 and 0.

Verify and Summarize

1. Since elasticity values for complements fall between -1 and 0, this indicates inelastic demand. A value between -1 and 0 shows that the quantity demanded decreases due to a price increase, but not very responsive.

Final Answer

The elasticity for a cross-price inelastic complement good is B. Between -1 and 0.